Satyam Scandal

Satyam Scandal

In 2008, a series of cyber-intrusions at the World Bank raised concerns about the security of international financial data held at the institution. The Bank’s chief vendor for cyber-security, Satyam Computer Services, Ltd. of India, came under scrutiny as the IT system the company had designed appeared vulnerable. The facts that emerged about the scandal subsequently included a massive accounting fraud, an ineffective World Bank response to the emergency and persistent questions about the integrity of the Bank and its actions. Satyam, a billion-dollar IT outsourcing corporation collapsed under the weight of the fraud in January 2009, and is now known as “India’s Enron.”

Background

In the spring and summer of 2008, the information system of the World Bank suffered a series of cyber intrusions. An e-mail obtained by Fox News showed that a minimum of 18 World Bank servers had been breached, and that of those, five contained sensitive data.

The Bank’s IT services had attracted concern before. For years, the Department of Institutional Integrity (INT), the Bank’s anti-corruption unit, had been investigating the relationship between Mohamed Muhsin, Chief Information Officer at the World Bank until 2005, and Satyam, the Bank’s ‘strategic partner’ in IT systems. In 2005, Muhsin retired under a cloud, as well as under investigation for receiving ‘improper benefits’ from Satyam.

Satyam was India’s fourth largest IT company and operated in 65 countries around the world. The company, at that point, claimed to employ 52,865 workers and serve 690 companies, including 185 Fortune 500 firms. Work in the U.S. accounted for 62 percent of Satyam’s revenues, and the company was headquartered in Hyderabad, India. Under Muhsin, Satyam had become deeply embedded as a ‘back office’ IT services provider at the World Bank, and in 2005, the company registered as a potential vendor with the UN.

After the cyber breaches at the World Bank came to light, Satyam was...